Saturday, March 08, 2008

What About Tuition Gouging, Windfall Endowments

The graph above was created using college tuition data from the National Center for Education Statistics (with estimates for 2007 and 2008), Consumer Price Index data from the BLS, and average annual oil price data for West Texas Intermediate Oil from Global Financial Data. All series are set to an index value of 100 in the base year of 1976. Comments:

1. During a 22-year period from 1982-2003, real oil prices were below their 1981 level.

2. College tuition has increased by almost 10X since 1976, compared to a 7.48X increase in oil prices over the same period.

3. Given the fact that college tuition has gone up by far more than oil prices over the last thirty years, why doesn't rising college tuition get the same attention as rising oil prices? Where are the Congressional hearings on "tuition gouging," "windfall university endowments ($411 billion currently)," etc.

4 Comments:

"...why doesn't rising college tuition get the same attention as rising oil prices?"

You have to be kidding right?

Rising college tuition is necessary to create larger student loans. Larger student loans mean that graduates are more likely to find the highest paying work in the field they are trained for so they can pay off their student loans. More graduates working is better for the economy.

Rising oil prices are a good political red herring to draw voter attention away from real issues. As long as congress holds hearings the mass of voters think that something might be in the works to lower oil costs.

Voters get to blow off a little steam, congressmen get to grandstand and oil prices remain the same. Everyone wins.

"Given the fact that college tuition has gone up by far more than oil prices over the last thirty years, why doesn't rising college tuition get the same attention as rising oil prices?"

I think the graph explains why. Tuition has gone up gradually as shown by the sloped line. On the other hand, oil has shot up more recently as shown by the vertical (well, almost) line.

In addition to the gradual rise in tuition, most of us probably think we will receive more rewards by investing in our education than putting our money into the gas tank and burning it up. I know I am much more concerned with my twice-monthly $120 fill-ups than I am with my $2500-per-semester tuition costs for graduate school.